Gold Prices Tumble on US-Iran Escalations and Strong Dollar
Gold prices in India have been trending downward, falling to their lowest level in over three weeks. The price of 24K gold has dropped by 0.21% to ₹151,560 per 10 grams, while 22K gold is at ₹138,930 per 10 grams. The decline is attributed to renewed military escalations between the US and Iran, which have increased concerns over supply disruptions through the Strait of Hormuz, further stoking inflationary concerns.
The safe-haven demand for the dollar has increased as the dollar index climbed to its highest levels in three weeks. A firm greenback makes precious metals like gold more expensive for holders of other currencies, thereby denting demand. Markets have also increased bets on a rate hike by the US Federal Reserve at its September meeting.
Analysts suggest that gold prices will remain range-bound over the near term, weighed by a spike in crude oil prices and a firm dollar. Increased expectations of a rate hike by the Fed are expected to weigh negatively on gold, as the central bank's policymakers have emphasized that it may opt for a hawkish stance if inflation is not controlled within the Fed's target of 2%.